Institutionalizing innovation

As the company matured, SELCO placed an even a greater emphasis on product innovation. In 2007, using unrestricted money from the Ashden Trust and the Renewable Energy and Energy Efficiency Program (REEEP), the company established an Innovation Department, part of a broader shift in how SELCO perceives its role in providing for all of the energy needs of India’s poor. As of 2009, the Innovation Department consisted of three full-time employees.

Sarah Alexander, an assistant manager in the Innovation Department, notes, “Innovation was always there in SELCO. It’s there in the branches, and they’ve done it in their own different ways as part of the regular business. …(T)hrough this department we will try and channel all sorts of new technology and new ideas. It needn’t be product-related. It can also be finance because that’s the whole idea behind the way SELCO works.”

The Innovation Department is an independent unit within the company that is not involved in marketing or sales. It works with Hande and senior management to come up with ideas that it views as important for the company to pursue. Of course, going beyond its solar offerings requires SELCO to work with partners—local and international, ranging from universities to vendors—that can provide the additional expertise and technology not available in-house. The Innovation Department, therefore, serves as a link between the end user and the product developer as well as facilitating the flow of knowledge between SELCO’s headquarters and the 25 branches.

“We do require the Operations Department to work with the [Innovations Department] staff and to actually get their cooperation and get things moving because naturally, for employees, their first preference would be sales,” Alexander says. “So you include this as another portfolio where you can incentivize them or at least get the Operations Department to motivate its staff to actually take up an innovation project.”

Ground staff plays an obvious role in the innovation process, as sales and service employees are in direct contact with customers and are able to observe the latent needs that could be met with new product offerings. However, since the concept of formalized “innovations” is still relatively new at SELCO, there remains haziness among employees about the exact role of the department.

“We have to get people used to the idea of non-solar products, to look for them,” Alexander explains. “There is tremendous knowledge at our field level. (Employees) would have seen these problems. They would have seen, possibly, the solutions. But they wouldn’t really know who to talk to. We use the Operations Department to channelize their thought processes to us.”

Incubation lab

An approach that relies on academic or other private-sector partners to develop new technologies does come with limitations. Particularly given SELCO’s customized approach, the company may not always be able to find the right—or any—partners that can address its customers’ specific needs. Relying on outside parties can delay response times to delivering solutions once potential areas for innovation are identified. Moreover, SELCO does not control the technical development process, which not only hampers its abilities to provide the best products for its customers but also gives up ownership of  proprietary technologies.

Given these limitations, in early 2009, SELCO opened an Incubation Lab to serve as the technical arm of the Innovations Department. The lab is based in the small town of Ujire, approximately 200 miles west of Bangalore. Its mission is to develop renewable energy-based technologies for rural people, with the challenge of using locally available materials that are affordable to the base of the pyramid population. Alexander explained that in the long term, the Incubation Lab is going to be an independent of SELCO and have its own functions and directives.

The lab is run by an engineer, Anand Narayan, who grew up in Bangalore and completed his master’s and PhD work in the United States. Narayan first met Hande in 1999 as a SELCO customer, when he bought a solar lighting system for his farm. Given their similar backgrounds, the two remained in contact and became friends.

Since the end of his undergraduate work, Narayan had had an interest in developing rural technologies for the poor. One day, while talking with Hande during a visit to Bangalore, Narayan received a surprising request from the SELCO founder: a proposal to establish an Incubation Lab where Narayan could design and test new products.

Though the budget was modest and the Incubation Lab was based out of donated space at a local secondary school, Narayan earnestly launched into several projects, including low-cost solar fencing to keep livestock penned, solar dehydrators for preserving fruits and vegetables, and a machine that could de-husk and grind grains while expelling oil. He also managed to recruit a small staff of summer interns -- two members of Engineers Without Borders and an MBA student from MIT Sloan.

By the end of 2009, the Incubation Lab had moved down the road into a newly constructed building on the campus of the SDM Institute of Technology. As part of its agreement with the SDM Institute, the lab would use SDM’s engineering students to help develop new technologies. The students would gain hands-on experience to complement their education, while SELCO would benefit from their technical expertise.